Gift and Estate Tax Planning
Attorneys, Accountants, and Financial Advisors need to know the value of a business or business interest in conjunction with an overall gift and estate plan. In addition a business valuation, performed by a credentialed business valuation analyst is required by the Internal Revenue Service to support the value of a gif of the interest of determine the value for an estate.
Succession Planning / Buy – Sell Agreements
Business owners need to develop a succession plan for their heirs and their Company and have a strategy for leaving the company. If the Company is being passed or sold to more than one person, a buy/sell agreement is a necessary document to execute when the business begins and everyone’s interest are aligned. The agreement establishes the terms and conditions for the purchase or sale of an owners interest when a triggering event, such as the death, disability or retirement of on owner occurs.
When a triggering event occurs without a buy/sell agreement in place, interest are no longer aligned , and there is a greater chance of disagreement on issues such as price, terms and conditions which can turn into the loss of long term relationships and possibly expensive lawsuits.
A business valuation to establish the value of the interest when the triggering event occurs should be part of every buy/sell agreement.
An easy question to ask in determining the importance of a buy/sell agreement Is: If your business partner dies, do you really want to be in business with the spouse, the children, or better yet the spouse’s attorney?
Sale of purchase of a business or business interest
As a buyer, you want to make sure you do not overpay for the company. As a seller, you want to make sure don’t leave money on the table you should have. In either case, a business valuation will give you an independent, unbiased, and objective opinion of the value of your business.
Additional reasons for a Business Valuation
- Valuations in connection with insurance claims
- Marital Dissolution.